How to Manage Delinquent Customers in Business

Posted by Ryan Howard on Jul 9, 2021 5:03:38 PM

How to Manage Delinquent Customers in Business

If your business sends invoices or bills on credit or at recurring intervals, you likely have customers who pay late or not at all.  Delinquent customer accounts can affect everything from paying business expenses to destroying business relationships. Customers may be paying late due to a number of reasons, including lost invoices, expired credit cards, or the inability to pay. Instead of taking it personally, your business can follow these tips to recover the account in a professional manner. 

Here's how to manage delinquent customers in business.


Keep Track

The best way to manage delinquent customers in business is to run regular aging reports to identify outstanding invoices or missed payments. It's easy for low priority or low balance invoices to get overlooked or pushed to the back burner. This practice can add up quickly if they're not addressed. Accounts receivable clean-up is necessary to ensure that these delinquent accounts don't get written off as bad debt.Collect More Cash With A/R Clean Up

Cover Your Bases

Before following up with your customer, make sure that you're covering your bases:

  • Did you send an invoice?
  • Did the invoice include all pertinent information required including payment terms?
  • Does the amount invoiced or the amount charged align with the customer agreement?

When you ensure that everything has been covered and all work has been done, you'll also feel more confident about the next step.

Follow Up

While it may be uncomfortable or time-consuming to track down a missed payment, the sooner you do it, the better. You can start with sending an email or demand letter that is friendly and firm. Record all correspondence with the customer for future collections efforts. Download this collections guide for more details on when to follow up.Download Collections Letter Template (Doc)

Call The Customer

If the customer isn't being responsive to emails or letters, it's time to pick up the phone. If you're wondering what to say when your customer won't pay, the most important piece of advice is to make sure you're prepared to negotiate a payment plan or offer other easy options for payment. Don't assume that no response means no money. Once you get them on the phone, you can listen and work with your customer to handle the situation.

Charge Late Fees

It is absolutely within your rights to charge late fees for missed payments. Your customer, however, needs to know in advance to expect late charges through your payment terms on the invoices or contracts.  Second and later notices of late payment will list a percentage of the total amount that is being charged as a late fee. 

Stop Service

Once the customer is past a certain point of delinquency, as stated in the customer agreement or contract, your business should stop service or delivery of goods to the customer.  An unfortunate side effect of managing delinquent customers in business is affecting their business.  There's no reason for you to continue to lose more money.HOW MUCH TO HIRE A  THIRD-PARTY COLLECTIONS AGENCY?

Call in Professionals

At this point, if you still haven't resolved the delinquent customer debt or the debt is over 90 days past due, it's a great idea to call in a third-party collections agency.  You can be relieved of the obligation to keep calling and professional collections agents can take over using their years of experience and expertise.  And the best part is, you don't have to pay a cent unless they can recover your delinquent customer account.  Learn more about Enterprise Recovery's collections process here and let us know how we can help. 

Topics: Best Practices, Accounts Receivable, Hiring a B2B Collections Agency, Commercial Debt Collection